Last year, the retirement age for Malaysia’s civil servants has been raised to 58 years old. This is a personal choice for those who want to work for a few more years. For some people, it is not a choice but a must as some really need the income to live on. This situation is quite common as even retirees in the United States are facing the same dilemma.
A survey conducted by the Employee Benefit Research Institute in the USA shows that only a small percentage of workers (13%) have confidence of a comfortable retirement. Only 20% of retirees believe that they have sufficient money for retirement which is down from 41% in 2007.
The above situation stems from the fact that more and more people have to depend on their own savings for funding their retirement. In the United States, the average amount saved by people in their 60s is only USD100, 000 in 2007. Do not be surprise to hear that people in this age group still have debts to pay where the median debt is USD50, 000 and 45% of them still carry balances on their credit cards.
In Malaysia, according to the Employees Provident Fund (EPF), the average savings of members are low. The average savings at age 54 is RM114, 402 as reported by the EPF in 2006. Members are encouraged to increase their retirement savings in order to have at least RM120, 000 in their EPF fund when they reach 55 years of age. This is sufficient to generate RM500 a month and would last for 20 years until the person is 75 years old.
The following ideas are gleaned from moneycentral.com for those approaching their retirement. These are tips to get your finances in order and ensure a happy retirement.
1. Set a target retirement date
Having a target retirement date will enable you to plan how much money you need and how much money you have to fund it. Be flexible as you may end up having to work longer, part-time or otherwise in order to boost your retirement fund.
2. Determine where you are going to live
Where you live will have an impact on your expenses and how much money you need to cover for it. Are you going to live in a mortgage-free house, a small apartment, an expensive condo or holiday home? If necessary, you have the option of moving to a cheaper abode which also allows you to free up your home equity for other purposes.
3. Get the proper insurance coverage
Before you reach retirement, get enough health insurance coverage. As you get older, your health will deteriorate and your insurance will help to offset part of the medical or treatment cost.
4. Settle your debts
Ideally, you should not have any debts to deal with going into retirement. You may be relying mostly on your pension, savings or retirement funds which may not be sufficient to repay any outstanding debts or loans.
5. Come up with a retirement budget
Draw up your retirement budget and actually practice using it before you retire to get a good feel about it. Eventually, you can design a budget that is suitable for you upon retirement.
6. Time to review your estate plans or living will
As you get older, the risk of getting seriously ill or being incapacitated increases. Hence, it may be the right time to draw up a will if you do not have one yet or to review an existing will or estate plan. This is to ensure that your loved ones are properly taken care off. At the same time, you may also want to update your beneficiaries on your retirement, bank or savings accounts, investment accounts, life or health insurance policies, etc.
Read other articles by Jacquelyn at WParent.com on parenting matters and http://Tips4Everyone.com on solving marriage problems.
6 replies to "Nearing Retirement? Are You Ready for It?"
I, for one, admits that I am soooo not ready for any retirement soon. I am 38 and I have not achieved any financial freedom, nor have any retirement plan. Sometimes, I feel like a zombie – work sleep work sleep work sleep – is what I do.
I am worried, yes I do. I am worried that I will end up like one of those old people that works at McD, picking cupboard at the road side, or going through garbage bins trying to find something useful to sell – scraping by each day. It terrifies me.
Of course, I am not going down without a fight. I am trying to increase my financial IQ as suggested by famous Mr. Robert T. Kiyosaki. I also bought Mr. K C Lau’s Top Money Tips for Malaysians. I am trying to start passive income. I am learning about property investment. I am learning about paper assets. I am learning about commodities trading.
“At least I am trying”…that’s what I tell myself each day becuase it is not only about my retirement, it is about caring for my love ones, its about securing a comfortable retirement for my family.
Yes, me too. I’ve been doing a lot of reading on how to retire comfortably. Till now i’m still looking that magic word on how to retire without being burden with debt. Sooooo, fast forward 10 years ahead, im 35 by the way, i’m still living with my mama, and i still get pocket money from her.
Nice to stumble another personal finance site. It’s the niche of my blog too. 🙂
Well, in my case, I’ve also been preparing for my retirement as early as 21. I’ve been reading books about educating myself when it comes to financial intelligence and investments. Hopefully, I can achieve my goal of retiring at the age of 40s.
Do agree with Shogun, I too had set a target to retire at age of 40, with $1 million cash. However, I am still a long way to go. Setting a goal is really a must, to get to where you wanted, and jacquelyn article shed some lights on how to do it.
The funny thing though for Malaysians is that Malaysia is seriously one of the CHEAPEST countries to live in! I lived there for 4 years right in Ampag Park in Kuala Lumpur, and I go back every so often. So cheap.
It’s better to work and make big bucks in a expensive city such as Tokyo, Hong Kong, London, NYC … save all your money and then move to KL, not vice versa.
Keigu,
Shogun
Good article. MORE people need to set a retirement age so they can focus. When I was 22, I told myself I would retire at 40. I failed, but I did end up retiring at 45 with a networth of over $6 million, and about $3 million cash and liquid securities.
By setting a retirement goal earlier i.e. 45, I forced myself to focus on savings and investing. If I set the age at 65, or 40+ years of work I wouldn’t bother, just like how people don’t bother studying for an exam until a week before.
My co-writer, RB is 32 and has a couple million net worth. He’s well on his way!
Keigu,
Shogun
Slicing Through Money’s Mysteries